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With the exception of the long bond,

Treasury securities traded in a narrow range and ended the day near their levels of last week. The 30-year Treasury gained some premium value because of its near-certain removal later this year, and its price rose almost half a point during early sessions before retreating toward the close. Yields displayed minimal movement.

According to

, trading volume by midafternoon was only about 60% of what it has been over the past five days.

The money market will, however, see more action this week as the


sells $10 billion and $11 billion each of the 4.75- and 10-year notes and the 30-year bond. Traders indulged in some selling at the market's short end in order to drive down the price of the new notes to be issued.

The benchmark 10-year

Treasury note fell 4/32 to 104 8/32, raising its yield 1.8 basis points to 5.177%.

The 30-year

Treasury bond rose 9/32 to 110 30/32, lowering its yield 1.9 basis points to 5.493%.

President Bush formally announced today his $1.6 trillion tax proposal, stating that it would be applied retroactively to Jan. 1. Analysts hope that its beneficial effects will be evident by summer.

"The market is starting to come around to the fact. There has been growing sentiment that the tax cuts will happen," said Randolph Donney, managing analyst at

IFR Thomson Financial


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He believes that with

Alan Greenspan cutting interest rates and the tax breaks helping out, the economy should come out of a recession by the second half of the year.

While there is continuing debate on whether the general economy is in a recession, it is acknowledged by all analysts that the manufacturing sector is definitely contracting.

Donney alleges that Friday's jobs number was not as upbeat as the sharp increase in non-farm payrolls made it out to be. "It was pretty mediocre."

Regarding the current drift of the market, he thinks the market's momentum will be capped by the interest rate cuts. He also noted how it has recently been pricing in the scarcity of Treasuries.

"Going by the signals that the Treasury is sending out, the elimination of the 30-year is a real possibility. People who have to balance out their portfolios are going to be aggressive buyers of that security," Donney said, adding, though, that the 10-year issue is the benchmark now in most financial markets and the same will apply to the U.S.

Speaking to reporters in Bangkok,

New York Federal Reserve

President William McDonough stated that economic growth should pick up around midyear. This echoes the predictions of many others. "To be more specific, by the second half of the year, the economy will be growing quite strong," McDonough said.

At the

Chicago Board of Trade

, the March

Treasury futures contract rose 9/32 to 104 22/32.

Economic Indicators

In economic news, the

Purchasing Managers' Non-Manufacturing Index


definition |


)fell to 50.1 in January from its revised value of 61.1 in December. Readings above 50 denote expansion, so the index is only barely positive. Most significant is the extent of the falloff since December. New orders and order backlogs decreased, and export and employment growth slowed. Meanwhile, imports were unchanged. The data are in line with that of the manufacturing index, which came out last week and indicated a sharp dip into recession territory.

Currency and Commodities

The dollar fell against the yen and the euro. It lately was worth 114.71 yen, down from 115.65. The euro was worth $0.9383, up from $0.9360. For more on currencies, see


Currencies column.

Crude oil for March delivery at the

New York Mercantile Exchange

fell to $30.55 a barrel from $31.19.


Bridge Commodity Research Bureau Index

fell to 225.48 from 228.09.

Gold for April delivery at the


fell to $265.20 an ounce from $267.10.